318 is not hot enough

I can't imagine how it can be running to a max of 160* with a closed thermostat at idle. It should overheat.

Also…….. Your gauge gets it's temp signal from the engine side of the stat and your manual test was done at the radiator.

Yet both temps were the same at idle with a closed stat.

Sorry…… I can't help. It's an impossible scenario.

Maybe you don't have a thermostat at all or the one you have is stuck open.

If it never gets above 160* with the water not circulating you could probably remove your cooling system, run air cooled and not worry about it.